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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

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Reporting Requirements for Annual Financial Reports of State Agencies and Universities

Notes & Samples

NOTE 31 – Tax Abatements

GASB 77 disclosure requirements include tax abatements that reduce the reporting agency’s tax revenues as a result from agreements entered into by either:

  • The agency
  • Other agencies or governments
  • The agency’s discretely presented component unit(s)

Agreements by the Agency

According to GASB 77, paragraph 7, agencies must disclose the following information related to tax abatement agreements entered into by the agency that reduce the reporting agency’s tax revenues:

  • Names (if applicable) and purposes of all tax abatement programs
  • Specific taxes being abated
  • Authority under which tax abatement agreements are entered into
  • Criteria that make a recipient eligible to receive a tax abatement
  • Mechanism by which the taxes are abated, including:
    • How the tax abatement recipient’s taxes are reduced (such as through a reduction of assessed value)
    • How the amount of the tax abatement is determined (such as a specific dollar amount or a specific percentage of taxes owed)
    • Provisions for recapturing abated taxes (if any) including the conditions under which abated taxes become eligible for recapture
    • Types of commitments made by the recipients of the tax abatements
  • Gross dollar amount (on an accrual basis) by which the agency’s tax revenues were reduced during the reporting period as a result of tax abatement agreements
  • If the amounts are received or receivable from other agencies or governments in association with the forgone tax revenue, disclose:
    • Names of the agencies or governments
    • Authority under which the amounts were or will be paid
    • Dollar amount received or receivable from other agencies or governments
  • If the agency made commitments other than to reduce taxes as part of a tax abatement agreement, disclose a description of the:
    • Types of commitments made
    • Most significant individual commitments made — commitments other than those made to reduce taxes until the agency has fulfilled its commitment
  • If tax abatement agreements are disclosed individually — a brief description of the quantitative threshold the agency used to determine which agreements to disclose individually
  • If an agency omits specific information required by GASB 77 because the information is legally prohibited from being disclosed — a description of the general nature of the tax abatement information omitted and the specific source of the legal prohibition

Agreements with Other Agencies or Governments

According to GASB 77, paragraph 8, agencies must disclose the following information related to tax abatement agreements entered into by other agencies or governments that reduce the reporting agency’s tax revenues:

  • Brief descriptive information (including the names of the agencies or governments entering into the tax abatement agreement and the specific taxes being abated)
  • Gross dollar amount (on an accrual basis) by which the agency’s tax revenues were reduced during the reporting period as a result of tax abatement agreements
  • If the amounts are received or receivable from other agencies or governments in association with the forgone tax revenue, disclose:
    • Names of the agencies or governments
    • Authority under which the amounts were or will be paid
    • Dollar amount received or receivable from other agencies or governments
  • If tax abatement agreements are disclosed individually — a brief description of the quantitative threshold the agency used to determine which agreements to disclose individually
  • If an agency omits specific information required by GASB 77 because disclosure of the information is legally prohibited — a description of the general nature of the tax abatement information omitted and the specific source of the legal prohibition

Agencies that are legally prohibited from disclosing specific information required by GASB 77 may omit that information (subject to the requirements of GASB 77, paragraphs 7f and 8e).

Agreements with the Agency’s Discretely Presented Component Unit(s)

Disclose the following information related to tax abatement agreements entered into by the agency’s discretely presented component units that reduce the reporting agency’s tax revenues:

  • If the agency concludes that the information is essential for fair presentation (based on the application of GASB 14 [as amended]), disclose tax abatement agreements to the provisions of GASB 77, paragraph 7.
  • Otherwise, disclose such tax abatements according to the provisions of GASB 77, paragraph 8.

Additional Disclosure Requirements

In addition to GASB 77 disclosure requirements, the Government Finance Officers Association (GFOA) recommends that agencies include additional information for tax abatements disclosures in the agency transmittal letter.

Submit a copy of the agency’s Note 31 from its published AFR through the ONDSS web application. The required format is a Microsoft Word document (latest version: docx) with header information that includes: agency name/number and note number/name. If Note 31 does not apply, do NOT submit a note to indicate “not applicable.”